Japan's very low rates could affect banks

10:00 13.12.2017

Financial experts worry that that the Bank of Japan's shockingly low interest rates could affect Japanese banks' business, as a Reuters survey disclosed on Wednesday.

BOJ Governor Haruhiko Kuroda pointed to this possibility when he referring to a "reversal rate" or the decisive level where major bank rate cuts can painfully impact the Japanese economy by simply squeezing lending margins to a level where Japanese banks lose interest in making loans.

The previous week, Kuroda told that the BOJ might cancel its crisis-mode stimulus, warning of the risk that excessive stimulus could undermine financial institutions’ health.

28 of 36 market experts surveyed during December 4-12 told that they worried about the negative impact the BOJ's policy could have on financial institutions. Five experts told they nearly didn’t care about it.

Additionally, 17 of 35 market experts told that recent remarks by BOJ board members on the reversal rate wouldn’t impact the BOJ’s monetary policy. However, 13 are assured that such comments suggest Japan’s key financial institution refrains from extra easing.

Similar

In December, new orders for major American capital goods suddenly slumped in the face of decreasing demand for machinery as well as primary metals, indicating a sustained deceleration in business spending on equipment, which could further impact economic…

Japan&#39;s March real wages went down at the fastest pace in nearly two years, weighed by minor nominal pay lifts as well as a moderate ascend in consumer prices, thus posing a setback for Prime Minister Shinzo Abe&#39;s tries to revitalize the Japanese…